As Europe scrimps, budget airline Ryanair soars
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| London
Spartan, garishly colored cabin interiors, seats stripped of pockets, a seemingly constant bombardment of mid-air retail offerings, and a cheesy automated trumpet fanfare that announces 鈥測et another on-time arrival.鈥
It could only be Ryanair, the budget airline European travelers love to grumble about while readily snapping up its fares. The pattern has transformed the nature of travel on the continent and forced more upmarket rivals, including British Airways and Lufthansa, to mimic its 鈥渘o frills鈥 model.
While companies from a range of sectors across the continent continue to struggle against the headwinds of deep austerity, better than expected results released this week by the Dublin-based carrier for the first half of this year underlined the apparent resilience of one of Europe鈥檚 most extraordinary business success stories. Despite operating in cash-strapped times where many Europeans are cutting back on the pre-austerity habit of taking multiple weekend city vacations, it posted a 10 percent rise in net profit and 15 percent rise in revenues to 鈧3.1 billion (almost $4 billion).
The announcement Monday also came with the confirmation that Ryanair is adding nine new routes from English airports in a move slated to create 1,000 new jobs next year.
No transatlantic expansion... yet
While the airline continues to expand in Europe, where it carried 48 million passengers in the year up to September, don鈥檛 expect Ryanair to turn its attention to the US for the moment.
鈥淚 think it's unlikely we will see a Ryanair transatlantic [service] for the next three or four years,鈥 the airline鈥檚 famously bombastic chief executive, Michael O鈥橪eary, told British broadcaster Sky News. Mr. O鈥橪eary cited the reason as being a delay in the delivery of new, long haul aircraft.
However, many experts who have long been fascinated by the story of Ryanair 鈥 a 27-year-old start-up that was losing large sums of money as recently as the 1980s, until O鈥橪eary turned it around by copying the low-cost characteristics of Dallas-based Southwest 鈥 suggest that future long-haul ambitions may be a factor in the company鈥檚 ongoing interest in buying its Irish rival Aer Lingus.
鈥淚f they do acquire Aer Lingus, they have this ready-made way of trying to launch a budget transatlantic services,鈥 says Eleanor O鈥橦iggins of the School of Business at University College Dublin, who has written a series of case studies on Ryanair.
Now in the midst of its third attempt to take over Aer Lingus, Ryanair this week cranked up its efforts by submitting proposals designed to alleviate European Commission concerns about competition being stifled.
Dr. O鈥橦iggins stresses some of the challenges of flying transatlantic service for the budget model, which she suggests might only work on shorter routes such as Dublin to New York, and envisages that Ryanair may have to compromise by providing free meals, extra leg room, and scope to bring more luggage.
But she adds: 鈥淚t would be interesting to see if they can have success where others have failed. There have been others starting with Laker in the 1970s, and Canadian airline Zoom more recently, but I would say if anyone does succeed it would be Ryanair.鈥
For now though, talk of transatlantic service remains just that, as well as another handy way for O鈥橪eary to continue attracting headlines.
Expansion east and south?
Much more likely is continued growth in Europe, where Ryanair aims to grow its share of the short-haul air travel market from 12 to 18 percent over the next decade.
Tom Lawton, professor of strategy and international management at the Britain-based Open University business school, suggests that, rather than westwards, the growth is more likely to be eastwards, and possibly southwards.
He says: 鈥淟ow-cost airlines like Hungary鈥檚 Wizz Air have been looking to Russia, for example, and North Africa is also an option. Ryanair already flies to Morocco, although these destinations are outside of the EU and so the regulatory challenges are much higher.鈥
鈥淩ather than transatlantic flights, it鈥檚 more likely that they will just keep doing what they are doing, and perhaps look at new opportunities such as Eastern Europe.鈥
Ryanair鈥檚 major achievement, and one that cannot be ignored, is to inject cost efficiency into the European aviation sector, says Professor Lawton.
Looking ahead, and with the stated aim of carrying 120 million people each year by 2022, Ryanair said in a statement Monday that "further airline failures and consolidations are inevitable given the fragmentation among European airlines and the existence of so many high cost, high fare airlines with poor punctuality records."
With characteristic bluntness, its boss was meanwhile once again batting away the often-voiced suggestion from journalists that it treats its passengers with little respect.
鈥淚n Ryanair we care more about passengers more than any other airline,鈥 he told Sky News.
鈥淭hat's why we give you the lowest fares, brand new aircraft, all leather suits, and on time flights, and that's what passengers really want. They don't want to be delayed in rubbish airports. They want to arrive at the airport, get on the plane and go, and save a bundle of money doing it."